Dividend yield must be ≥ 4.0% (ideal: 4.7%+). This ensures the stock provides meaningful income relative to its price.
Dividend must grow ≥ 10% annually (10-year CAGR preferred). This demonstrates the company's commitment to shareholders.
Payout ratio must be ≤ 75%. This ensures the company has room to grow dividends and weather downturns.
✓ Minimum 10 consecutive years of annual dividend increases
This is the cornerstone of the system. Companies that have raised dividends for 10+ consecutive years demonstrate financial strength, management confidence, and a commitment to shareholders. These are the most reliable dividend payers.
Start with stocks that currently pay regular cash dividends on major exchanges (NYSE, NASDAQ).
Confirm the stock has increased its dividend for at least 10 consecutive years. This is non-negotiable.
The current dividend yield must be at least 4.0%. This provides meaningful income today.
The dividend must have grown at least 10% annually over the past 10 years (CAGR). This ensures growing income.
The payout ratio must be 75% or lower, ensuring the company has room to grow dividends and handle downturns.
Stocks that pass all three filters are considered strong buy candidates. These are the "Perpetual Dividend Raisers" that generate reliable, growing income.
Dividend Cut or Suspension
The stock cut or suspended its dividend in the last 10 years, breaking the streak.
Negative Free Cash Flow
The company is spending more than it earns, which may not be sustainable long-term.
Share Dilution
The company has issued significant new shares, diluting existing shareholders' ownership.
Johnson & Johnson (JNJ)
60+ years of consecutive dividend increases. Stable healthcare company with strong cash flow.
Procter & Gamble (PG)
65+ years of consecutive dividend increases. Consumer staples with predictable earnings.
Coca-Cola (KO)
60+ years of consecutive dividend increases. Global beverage leader with strong pricing power.
3M Company (MMM)
60+ years of consecutive dividend increases. Diversified industrial company with global reach.
The 10-11-12 system combines three powerful principles that have proven effective over decades:
Companies that consistently raise dividends are demonstrating strong business fundamentals. They're generating more cash each year and have confidence in future growth.
By combining a 4%+ yield with 10%+ annual growth, you get both immediate income and compounding wealth creation. Your dividend income grows faster than inflation.
The 75% payout ratio limit ensures the company isn't over-leveraging dividends. This reduces the risk of dividend cuts during economic downturns.
The 10-year dividend increase requirement filters for companies with proven staying power. These aren't flash-in-the-pan performers; they're reliable, established businesses.